Understanding the NAIC’s Generator of Economic Scenarios (GOES)

Understanding the NAIC's Generator of Economic Scenarios (GOES)

August 6, 2026

 Article Summary 

• The NAIC's Generator of Economic Scenarios, or GOES, is intended to support the economic scenarios used in life and annuity statutory reserve and capital calculations by life and annuity insurers, actuaries, and state regulators and the NAIC.
• The current public-comment framework treats GOES as a governance issue as much as a modeling issue, with formal controls, validation, oversight, and sign-off responsibilities.
• The GOES (E/A) Subgroup sits at the center of that process because it owns the governance framework and approves updates to it.
• The framework contemplates ongoing review, including annual review and back-testing, periodic five-year recalibration, and recurring public exposure of the governance framework.

The NAIC's Generator of Economic Scenarios, or GOES, is best understood as a framework for producing the economic scenarios used in important life insurance reserve and capital calculations by regulators, insurers, and actuaries alike. In the current public-comment governance framework, the NAIC describes GOES as a model governance structure designed to support scenarios used for statutory reserves under the Valuation Manual and for capital under NAIC RBC requirements.

That matters because economic scenarios are not just background assumptions. They affect how insurers measure obligations, evaluate risk, and support solvency-related calculations. When those scenarios are used broadly across the industry, the discussion cannot be limited to whether the model works technically. It also has to address whether the model is governed appropriately, updated thoughtfully, reviewed independently, and maintained in a way that supports confidence in the results.

GOES is not just a model. It is a governance structure.

One of the clearest themes in the draft framework is that the NAIC does not view GOES as a one-time technical build. It views GOES as an ongoing governance process.

The framework says it is designed to mitigate risk by establishing governance and controls around the models that produce scenarios for reserve and capital purposes. That is an important point. It means the focus is not only on model design, calibration, or output. It is also on who is responsible for oversight, how changes are reviewed, how findings are handled, and how stakeholders can evaluate whether the model remains fit for use.

That distinction matters. When a common scenario set is being used in financial reporting and capital-related calculations, the quality of the governance process has practical consequences. It affects how much confidence users can place in the model outputs, how issues are escalated, and how quickly stakeholders can respond when conditions change.

The GOES (E/A) Subgroup plays the central role.

The public-comment framework makes the GOES (E/A) Subgroup central to the process. It states that the subgroup "will own the GOES Model Governance Framework and be responsible for the approval of all updates to the Framework."

That language is useful because it clarifies that the subgroup is not simply monitoring GOES from a distance. It is functioning as the model steward. It is responsible for overseeing the framework, directing NAIC staff support as needed, and reviewing significant updates.

Clearly assigned ownership is one of the more important features of any governance process. Without it, responsibility can become too diffuse. Here, the framework appears to avoid that problem by placing stewardship squarely with the subgroup.

The framework separates development, review, and oversight.

Another useful feature of the proposal is that it divides responsibilities among the different participants. Conning is responsible for model development, maintenance, production, and certain validation work. NAIC staff independently review scenario statistics and support the monitoring of controls. The GOES (E/A) Subgroup provides oversight and approves important governance updates.

That separation is important for practical reasons. When a model has broad financial implications, independent review and clearly assigned responsibilities help reduce the risk that errors, weak controls, or unchallenged assumptions go unnoticed. Strong outputs usually depend on strong process design, separation of duties, and a review function that is meaningful rather than merely procedural.

The framework's structure suggests an effort to build that discipline into both the monthly GOES process and the longer-term update cycle.

The update cycle is layered, not static.

The framework also makes clear that GOES is expected to evolve over time.

At the annual level, the draft says that Conning and NAIC staff will conduct an annual review of GOES and prepare a back-testing report comparing projected results to actual prior-year results. That kind of annual review is important because it creates a regular checkpoint. It allows the parties involved to evaluate whether the model is still performing as expected and whether parameter changes may be necessary.

The framework also provides for a broader recalibration cycle. It states that Conning will perform a GOES recalibration every five years. That suggests the NAIC expects more than just periodic maintenance. It expects a more comprehensive reconsideration of the framework at defined intervals.

Taken together, that approach is practical. Monthly starting conditions may change. Annual review may identify issues or trends. Over a longer period, a more substantial recalibration may be needed. The framework seems designed to accommodate all three levels.

That layered approach makes sense. It reflects a recognition that some changes are routine, some changes are evaluative, and some changes are structural. Those categories should not be treated the same way.

Public process is part of the design.

Another point that comes through clearly in the draft is that public process is part of the governance structure, not an afterthought. The framework states that it will be exposed for public comment for no fewer than 30 days at least annually during the second quarter.

That is important for two reasons.

First, it gives users and other interested parties an opportunity to comment on how GOES is governed, not just on a single technical issue. Second, it reinforces that the NAIC expects GOES governance to remain open to review and revision as the process matures.

Transparency is often one of the clearest indicators that a framework is intended to be durable. A process that is documented, exposed, and periodically revisited is generally more reliable than one that exists only through informal practice.

Why this matters.

From a broader perspective, GOES matters because it sits at the intersection of modeling, regulation, and financial reporting. Economic scenario generation affects statutory reserves and capital calculations. That means changes to governance, validation, update timing, or calibration can have consequences well beyond the model itself.

The current framework appears to recognize that reality. It is trying to build a structure that is controlled, reviewable, and adaptable. It also appears to recognize that a scenario generator used across the industry cannot be treated like a purely internal model. It has to be supported by documented processes, oversight responsibilities, and a mechanism for public input.

That does not mean every open question has been resolved. Public comment frameworks are still proposals, and the details matter. But the direction is clear. The NAIC is working to formalize not only how GOES functions, but how it is governed over time.

Conclusion

The NAIC's Generator of Economic Scenarios should be viewed as more than an economic modeling tool. Based on the current public-comment framework, it is also a governance system for how those scenarios are produced, reviewed, maintained, and updated for use in statutory reserve and capital calculations.

The most important takeaway may be that the NAIC is not treating GOES as a static model. It is building a process around it. That process includes subgroup ownership, annual review, periodic recalibration, and recurring public exposure.

For insurers, actuaries, and advisors, that governance structure may be just as important as the model itself.

FAQs

What is GOES? GOES is the NAIC's Generator of Economic Scenarios. Under the current public-comment framework, it is intended to support the scenarios used in life and annuity statutory reserve and capital calculations.

Why is governance such a big part of the GOES discussion? Because GOES is being used for regulatory and financial purposes that can have material consequences. The framework reflects the idea that it is not enough to have a model that produces outputs. There also needs to be a governance structure around how that model is controlled, reviewed, and updated.

Who is responsible for the governance framework? The draft says the GOES (E/A) Subgroup owns the GOES Model Governance Framework and is responsible for approving updates to it.

How often is GOES reviewed or recalibrated? The framework contemplates annual review and back-testing, along with a five-year recalibration cycle.

Will stakeholders have a chance to comment on the framework? Yes. The draft says the governance framework will be exposed for no fewer than 30 days at least annually during the second quarter.

Please contact the Larson Insurance Team for additional guidance.